The Bank of England has proposed that British banks align to new global capital rules by the start of 2025 with fewer concessions than proposed by European regulators.
Coming a day after Treasury minister Andrew Griffith confirmed the government’s intention to relax ring-fencing restrictions on the banking sector, the central bank said UK lenders are not expected to see a significant increase in overall capital requirements as part of the implementation of the Basel III standards, which were proposed after the bank bail-outs in the global financial crisis.
Sam Woods, deputy governor of prudential regulation for the BoE, said: “Alignment with strong international banking standards promotes economic growth by underpinning the competitiveness of the UK as a financial centre, supporting investors’ confidence in the UK banking system and ensuring that banks can finance the economy during downturns.”
He said the Bank’s proposals for implementing the Basel III standards will contain “appropriate but limited adjustments for the UK market”.
Banks were reported to be for larger concessions, such as those proposed by the EU, though these are mostly temporary.
Smaller lenders will get a different "strong and simple" regime, where the BoE suggested a revised proposal where banks who comply with the new regime criteria would not have to apply the remaining Basel rules for their capital buffers.
High street lenders and challenger banks will be involved in a consultation early next year.
Yesterday, Griffith, who is economic secretary to the Treasury, told banks at an FT conference that the government is looking at making the UK “a better place to be a bank”, release some of the “trapped capital” in the ring-fenced businesses over time.
Giants HSBC, Barclays, Lloyds and NatWest would still comply with ringfencing rules, with the rules expected to benefit the likes of Santander UK, Virgin Money UK PLC (LSE:VMUK), TSB and OSB Group PLC (LSE:OSB).